Lord Kerslake’s resignation shows the NHS is in a desperate situation

14 Dec 17

The resignation of Lord Bob Kerslake should serve as a warning to government that more resources need to be pumped into the NHS, says CIPFA's Paul Carey-Kent. 

With the social care system on the brink of crisis and the financial position of the NHS just as precarious, it is unfortunately not unusual for a leader within the sector to resign.

But the resignation of Lord Bob Kerslake [picture right], one of the most experience and highly regard public finance professionals we have in this country, is a sobering testament to how significant the pressures on health and social care services are.

Indeed, Lord Bob Kerslake, a CIPFA-qualified accountant and member, has the right skills and experience to help bring hospitals like Kings’ back from the financial precipice.

And he was, as made clear in his public statement, involved in making major and significant savings.

A person like him will undoubtedly be difficult to replace.

His departure, then, should serve as a warning to the government that urgent and drastic action is needed, otherwise the financial resilience of the system will continue to be undermined.

Of course, Lord Bob Kerslake’s departure isn’t the only red flag.

The government need only look at the highly-publicised increase in A&E waiting times, bed shortages and declining staff numbers to take stock of the very real impact financial pressures are having on services. 

However, there are other issues that aren’t hitting the headlines in the mainstream media.

Continuing good financial management, alongside the herculean efforts of NHS staff, will not be enough to stop the NHS from scrambling from one year to the next, as recognised by Lord Kerslake in his resignation.

CIPFA shared its concern with the media earlier this autumn that experienced CFOs are often feeling bullied by regulators to publicly report numbers they do not think are achievable.

This raises ethical issues not only for professionally regulated accountants but also non-executive board members and audit committees.

And the failure to come clean on the balance of pressures and savings achievable only means that that the issues facing organisations are being kicked into the long-grass, delaying the difficult but necessary decisions.

This kind of short-term approach is a system-wide issue, evident in how transformation funding is being used to shore up deficits, and how unprotected areas, such as public health, are being cut without serious thought for the long-term implications on frontline services.

Nor does it help that a strategic look at social care is also on the back burner, although hopefully the long-awaited green paper will help deliver meaningful change.

So what can be done to put the sector on a more sustainable footing and prevent other important and influential leaders from standing down?

An immediate cash injection, greater than the £1.5bn promised in the Autumn Budget, would help alleviate some of the immediate pressures.

Additionally, more resources over a longer period would also help sustain and transform the sector.

Last year, CIPFA estimated that there will likely be a £10bn financial black hole in NHS finances by 2020, as the floundering Five Year Forward View assumed that there would be £30bn in pressures and £22bn savings, both of which were far too optimistic.

Since then, STPs have come in, but the broad nature of the problem has not changed.

Bringing UK health spending in line with other European nations could provide services with a sustainable level of funding.

Health spending as share of GDP is – following a redefinition of terms - now at 9.9%, higher than the median for Organisation for Economic Co-operation and Development (OECD) member states. However, a 1.5% boost would be needed to be in line with countries such as France and Germany.

Of course, it is not just a matter relying on extra money, as the NHS must continue to take measures to encourage good financial discipline.

This should include a full assessment of pressures and savings plans, with sensitivity analysis, risk assessment, back-up plans for worse case scenarios; and, explicit identification of short, medium and long-term consequences of decisions.

But continuing good financial management, alongside the herculean efforts of NHS staff, will not be enough to stop the NHS from scrambling from one year to the next, as recognised by Lord Kerslake in his resignation.

Services are under the greatest pressures ever seen and the government must show leadership on this issue by investing extra resources and exploring radical funding options, otherwise services could well have to be rationed and it will be communities who suffer the consequences.

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